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OPINION: Is sharing sales houses a cost-effective move?

The Telegraph group’s decision to pull out of the proposed joint sales
house deal with Express Newspapers (Campaign, last week) will surprise
few. By and large, the industry view was that ego, politics or money -
or a combination of the three - would conspire against it.

The Telegraph group’s decision to pull out of the proposed joint sales

house deal with Express Newspapers (Campaign, last week) will surprise

few. By and large, the industry view was that ego, politics or money -

or a combination of the three - would conspire against it.

In the end, according to some close to the deal, it was the money factor

that did it.

Nevertheless, neither party will concede that the idea was a bad one -

so long as it’s with the right partner. In other words, both would try

again with somebody else. The question is: are they right to? And if so,

with whom?

It is certainly true that the mood among the big publishers is in favour

of merging back-office functions. They point to the success of TV and,

to a lesser extent, radio. Indeed, the use by regional press sales

houses show that the idea is not foreign to print either. But there is

one great difference. To some degree, TV, radio and regional press all

operate in relatively discrete markets, which means that competition

between the partners is limited. But the national press operates on a

different scale and, for some advertisers, they all compete with each

other.

What next? The problem for both groups is that there aren’t many

partners to dance with. The Express seems likely to revive talks with

the Mirror Group, although having failed with the Telegraph, its

negotiating position will be diminished. Associated seems set against

the idea. News International is a non-starter. This leaves the

Guardian/Observer as a potential partner. Of the two suitors, the

Telegraph seems the most likely and, given the large losses sustained on

the Observer, the Guardian may be willing to talk.

But, as this latest saga shows, such deals are extraordinarily difficult

to put together and, while it is easy to quantify the benefits of such

an arrangement in terms of costs savings, it is less easy to see the

revenue benefits. In the end it may be this that stalls the whole

process.

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